Universal Health Services, Inc. Reports 2017 Fourth Quarter And Full Year Earnings And 2018 Guidance

02/28/2018
Microphone Webcast - Live
Q4 2017 Universal Health Services Earnings Conference Call
3/1/18 at 9:00 a.m. ET
Consolidated Results of Operations, As Reported and As Adjusted - Three-month periods ended December 31, 2017 and 2016:

 

KING OF PRUSSIA, Pa., Feb. 28, 2018 /PRNewswire/ -- Universal Health Services, Inc. (NYSE: UHS) announced today that its reported net income attributable to UHS was $219.6 million, or $2.31 per diluted share, during the fourth quarter of 2017 as compared to $174.2 million, or $1.78 per diluted share, during the comparable quarter of 2016.  Net revenues increased 6.7% to $2.64 billion during the fourth quarter of 2017 as compared to $2.48 billion during the fourth quarter of 2016.

For the three-month period ended December 31, 2017, our adjusted net income attributable to UHS, as calculated on the attached Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule"), was $189.6 million, or $2.00 per diluted share, as compared to $176.0 million, or $1.80 per diluted share, during the fourth quarter of 2016. 

As reflected on the Supplemental Schedule, included in our reported results during the fourth quarter of 2017, is a net aggregate favorable after-tax impact of $30.0 million, or $.31 per diluted share, consisting of:

  • a favorable after-tax impact of $30.0 million, or $.32 per diluted share, resulting from a reduction in our net deferred income tax liability recorded in connection with the Tax Cuts and Jobs Act of 2017 (the "TCJA-17") which reduced the U.S. federal corporate tax rate to 21% from 35%, effective January 1, 2018;
  • a favorable after-tax impact of $13.5 million, or $.14 per diluted share, resulting from our January 1, 2017 adoption of ASU 2016-09, "Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"), as discussed below;
  • an unfavorable after-tax impact of $11.3 million, or $.12 per diluted share, due to the one-time repatriation tax incurred pursuant to the TCJA-17 (incurred in connection with our behavioral health care facilities located in the U.K. and Puerto Rico), and;
  • an unfavorable after-tax impact of $2.3 million, or $.03 per diluted share, related to the depreciation and amortization expense recorded in connection with the implementation of electronic health records ("EHR") applications at our acute care hospitals.

As calculated on the attached Supplemental Schedule, our earnings before interest, taxes, depreciation & amortization ("EBITDA"), increased 7.1% to $447.0 million during the fourth quarter of 2017 as compared to $417.1 million during the fourth quarter of 2016.

Consolidated Results of Operations, As Reported and As Adjusted  – Twelve-month periods ended December 31, 2017 and 2016:

Reported net income attributable to UHS was $752.3 million, or $7.81 per diluted share, during the full year of 2017 as compared to $702.4 million, or $7.14 per diluted share, during 2016. 

Net revenues increased 6.6% to $10.41 billion during 2017 as compared to $9.77 billion during 2016. As calculated on the attached Supplemental Schedule, our EBITDA increased 3.4% to $1.71 billion during 2017 as compared to $1.65 billion during 2016.

As reflected on the Supplemental Schedule, included in our reported results during the full year of 2017, is a net aggregate favorable after-tax impact of $26.8 million, or $.28 per diluted share, consisting of:

  • a favorable after-tax impact of $30.0 million, or $.32 per diluted share, resulting from a reduction in our net deferred income tax liability resulting from lower federal income tax rates beginning January 1, 2018 pursuant to the TCJA-17;
  • a favorable after-tax impact of $22.1 million, or $.23 per diluted share, resulting from our January 1, 2017 adoption of ASU 2016-09, as discussed below;
  • an unfavorable after-tax impact of $11.3 million, or $.12 per diluted share, due to the one-time repatriation tax incurred pursuant to the TCJA of 2017, and;
  • an unfavorable after-tax impact of $14.0 million, or $.15 per diluted share, related to the depreciation and amortization expense recorded in connection with the implementation of EHR applications at our acute care hospitals.

Acute Care Services – Three and twelve-month periods ended December 31, 2017 and 2016:

During the fourth quarter of 2017, at our acute care hospitals owned during both periods ("same facility basis"), adjusted admissions (adjusted for outpatient activity) increased 7.3% and adjusted patient days increased 5.2%, as compared to the fourth quarter of 2016. Net revenues from our acute care services increased 6.5% during the fourth quarter of 2017 as compared to the comparable quarter of the prior year. At these facilities, net revenue per adjusted admission decreased 0.1% while net revenue per adjusted patient day increased 1.9% during the fourth quarter of 2017 as compared to the comparable quarter of 2016.

During the twelve-month period ended December 31, 2017, at our acute care hospitals on a same facility basis, adjusted admissions increased 5.5% and adjusted patient days increased 2.8%, as compared to the full year of 2016. Net revenues from our acute care services increased 4.7% during the full year of 2017 as compared to 2016. At these facilities, net revenue per adjusted admission decreased 0.3% while net revenue per adjusted patient day increased 2.4% during 2017 as compared to 2016.

We provide care to patients who meet certain financial or economic criteria without charge or at amounts substantially less than our established rates. Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in net revenues or in accounts receivable, net. Our acute care hospitals provided charity care and uninsured discounts, based on gross charges, amounting to approximately $406 million and $399 million during the three-month periods ended December 31, 2017 and 2016, respectively, and $1.77 billion and $1.45 billion during the twelve-month periods ended December 31, 2017 and 2016, respectively. The provision for doubtful accounts at our acute care hospitals amounted to approximately $182 million and $136 million during the three-month periods ended December 31, 2017 and 2016, respectively, and $756 million and $628 million during the twelve-month periods ended December 31, 2017 and 2016, respectively.          

Behavioral Health Care Services – Three and twelve-month periods ended December 31, 2017 and 2016:

During the fourth quarter of 2017, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 2.5% while adjusted patient days decreased 0.7% as compared to the fourth quarter of 2016. At these facilities, net revenue per adjusted admission decreased 0.3% while net revenue per adjusted patient day increased 2.9% during the fourth quarter of 2017 as compared to the comparable quarter in 2016. On a same facility basis, our behavioral health care services' net revenues increased 1.6% during the fourth quarter of 2017 as compared to the fourth quarter of 2016.   

During the twelve-month period ended December 31, 2017, at our behavioral health care facilities on a same facility basis, adjusted admissions increased 2.4% while adjusted patient days increased 0.2% as compared to the full year of 2016. At these facilities, net revenue per adjusted admission decreased 0.4% while net revenue per adjusted patient day increased 1.9% during the full year of 2017 as compared to 2016. On a same facility basis, our behavioral health care services' net revenues increased 1.7% during 2017 as compared to 2016.   

Net Cash Provided by Operating Activities and Share Repurchase Program:

For the twelve months ended December 31, 2017, our net cash provided by operating activities was $1.18 billion as compared to $1.33 billion generated during the full year of 2016. The $151 million decrease was due to: (i) a $144 million unfavorable change in cash flows from foreign currency forward exchange contracts related to our investments in the U.K; (ii) a $90 million unfavorable change in other working capital accounts resulting primarily from changes in accounts payable and accrued expenses due to timing of disbursements, partially offset by; (iii) $83 million of other net favorable changes including a $63 million favorable change in accounts receivable.

In November of 2017, our Board of Directors authorized a $400 million increase to our stock repurchase program, which increased the aggregate authorization to $1.2 billion from the previous $800 million authorization approved during 2016 and 2014.  Pursuant to this program, we may purchase shares of our Class B Common Stock, from time to time as conditions allow, on the open market or in negotiated private transactions. 

In conjunction with this program, during the fourth quarter of 2017, we have repurchased approximately 1.0 million shares at an aggregate cost of $100.8 million (approximately $100 per share).  During the twelve months of 2017, we have repurchased approximately 2.96 million shares at an aggregate cost of $322.2 million (approximately $109 per share). Since inception of the program through December 31, 2017, we have repurchased approximately 7.35 million shares at an aggregate cost of $836.3 million (approximately $114 per share). 

2018 Full Year Guidance Range:

Reflected below is our 2018 guidance range for consolidated net revenues, earnings before interest, taxes, depreciation & amortization ("EBITDA"), earnings per diluted share ("EPS-diluted") and capital expenditures.  EBITDA is a non-GAAP financial measure and should be examined in connection with net income determined in accordance with GAAP as presented in the consolidated financial statements and notes thereto in this report or in our filings with the Securities and Exchange Commission including our Report on Form 10-K for the year ended December 31, 2017. Please see the Supplemental Non-GAAP Disclosures - 2018 Operating Results Forecast schedule as included herein for additional information and a reconciliation to the financial forecasts as computed in accordance with GAAP. 

 

For the Year Ended

 

December 31, 2018

 

       Low

       High

Net revenues

$10.923 billion

$11.063 billion

EBITDA

$1.758 billion

$1.837 billion 

Adjusted EPS-diluted

$9.25 per share

$9.90 per share

Capital expenditures

$600 million

$625 million

Our 2018 guidance contains a number of assumptions including, but not limited to, the following:

  • This guidance excludes the impact of future items, if applicable, that are nonrecurring or non-operational in nature including items such as, but not limited to, the impact of gains/losses on sales of assets and businesses, costs related to extinguishment of debt, reserves for settlements, legal judgments and lawsuits, impairments of long-lived assets, impact of share repurchases that differ from included assumptions and other material amounts that may be reflected in our financial statements that relate to prior periods. It is also subject to certain conditions including those as set forth below in General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures.
  • Our net revenues are estimated to be approximately $10.923 billion to $11.063 billion representing an increase of approximately 5% to 6% over our 2017 net revenues of approximately $10.410 billion.
  • This adjusted EPS-diluted guidance range represents an increase of approximately 23% to 31% over the adjusted net income attributable to UHS of $7.53 per diluted share for the year ended December 31, 2017, as calculated on the attached Supplemental Schedule.
  • This adjusted EPS-diluted guidance range includes the estimated favorable impact on our 2018 provision for income taxes and net income attributable to UHS, resulting from the TCJA-17, amounting to approximately $142 million to $152 million, or $1.52 to $1.63 per diluted share.
  • This guidance range, like our adjusted earnings for 2017 as discussed above, excludes the impact on our provision for income taxes and net income attributable to UHS resulting from of our January 1, 2017 adoption of ASU 2016-09, as discussed below.

Adoption of ASU 2016-09:

Effective January 1, 2017, we adopted ASU 2016-09, "Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting", which amends the accounting for employee share-based payment transactions to require recognition of the tax effects resulting from the settlement of stock-based awards as income tax expense or benefit in the income statement in the reporting period in which they occur.  In connection with the adoption of ASU 2016-09, during the three and twelve-month periods ended December 31, 2017, we recorded reductions to our provision for income taxes of $13.5 million and $22.1 million, respectively, which resulted in a corresponding increases in our net income attributable to UHS of $13.5 million, or $.14 per diluted share, during the fourth quarter of 2017 and $22.1 million, or $.23 per diluted share, during the full year of 2017.

Since the impact of ASU 2016-09 on our future financial statements is dependent upon the timing of stock option exercises, and the market price of our stock at the time of exercise, we are unable to estimate the impact this adoption will have on our future provision for income taxes and net income attributable to UHS.  This reporting change is applied prospectively, effective as of January 1, 2017, with the exception of the change in the presentation of the excess income tax benefits related to stock-based compensation in the Statement of Cash Flows, which was applied retrospectively.    

Conference call information: 

We will hold a conference call for investors and analysts at 9:00 a.m. eastern time on March 1, 2018. The dial-in number is 1-877-648-7971. 

A live broadcast of the conference call will be available on our website at www.uhsinc.com.  A replay of the call will be available following the conclusion of the live call and will be available for one full year.

General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures:

One of the nation's largest and most respected hospital companies, Universal Health Services, Inc. ("UHS") has built an impressive record of achievement and performance. Growing steadily since its inception into an esteemed Fortune 500 corporation, UHS today has annual revenue exceeding $10 billion. In 2017, UHS was recognized as one of the World's Most Admired Companies by Fortune; ranked #276 on the Fortune 500, and listed #275 in Forbes inaugural ranking of America's Top 500 Public Companies.

Our operating philosophy is as effective today as it was 40 years ago, enabling us to provide compassionate care to our patients and their loved ones: Build or acquire high quality hospitals in rapidly growing markets, invest in the people and equipment needed to allow each facility to thrive, and become the leading healthcare provider in each community we serve.

Headquartered in King of Prussia, PA, UHS has more than 83,000 employees and through its subsidiaries operates 326 inpatient acute care hospitals and behavioral health facilities and 32 outpatient and other facilities located in 37 states, Washington, D.C., the United Kingdom, Puerto Rico and the U.S. Virgin Islands. It acts as the advisor to Universal Health Realty Income Trust, a real estate investment trust (NYSE:UHT).  For additional information on the Company, visit our web site: http://www.uhsinc.com.

This press release contains forward-looking statements based on current management expectations.  Numerous factors, including those disclosed herein, those related to healthcare industry trends and those detailed in our filings with the Securities and Exchange Commission (as set forth in Item 1A-Risk Factors and in Item 7-Forward-Looking Statements and Risk Factors in our Form 10-K for the year ended December 31, 2017), may cause the results to differ materially from those anticipated in the forward-looking statements.  Many of the factors that will determine our future results are beyond our capability to control or predict. These statements are subject to risks and uncertainties and therefore actual results may differ materially.  Readers should not place undue reliance on such forward-looking statements which reflect management's view only as of the date hereof.  We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

We believe that operating income, operating margin, adjusted net income attributable to UHS, adjusted net income attributable to UHS per diluted share and EBITDA, which are non-GAAP financial measures ("GAAP" is Generally Accepted Accounting Principles in the United States of America), are helpful to our investors as measures of our operating performance. In addition, we believe that, when applicable, comparing and discussing our financial results based on these measures, as calculated, is helpful to our investors since it neutralizes the effect in each year of material items related to the implementation of EHR applications at our acute care hospitals, the impact on our 2017 provision for income taxes and net income attributable to UHS resulting from the TCJA-17, the impact on our provision for income taxes and net income attributable to UHS resulting from our adoption of ASU 2016-09, and other potential items that are nonrecurring or non-operational in nature including, but not limited to, costs related to extinguishment of debt, gains/losses on sales of assets and businesses, reserves for settlements, legal judgments and lawsuits, impairments of long-lived assets, and other material amounts that may be reflected in the current or prior year financial statements that relate to prior periods.  To obtain a complete understanding of our financial performance these measures should be examined in connection with net income, determined in accordance with GAAP, as presented in the condensed consolidated financial statements and notes thereto in this report or in our other filings with the Securities and Exchange Commission including our Report on Form 10-K for the year ended December 31, 2017. Since the items included or excluded from these measures are significant components in understanding and assessing financial performance under GAAP, these measures should not be considered to be alternatives to net income as a measure of our operating performance or profitability. Since these measures, as presented, are not determined in accordance with GAAP and are thus susceptible to varying calculations, they may not be comparable to other similarly titled measures of other companies. Investors are encouraged to use GAAP measures when evaluating our financial performance.

 

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Universal Health Services, Inc.

Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)

               
 

Three months

 

Twelve months

 

ended December 31,

 

ended December 31,

 

2017

 

2016

 

2017

 

2016

               

Net revenues before provision for doubtful accounts

$2,849,971

 

$2,638,436

 

$11,278,942

 

$10,507,788

  Less: Provision for doubtful accounts

207,184

 

162,751

 

869,077

 

741,578

Net revenues

2,642,787

 

2,475,685

 

10,409,865

 

9,766,210

               

Operating charges:

             

   Salaries, wages and benefits

1,254,851

 

1,156,729

 

4,980,637

 

4,585,530

   Other operating expenses

624,986

 

614,490

 

2,493,062

 

2,359,339

   Supplies expense

284,854

 

263,872

 

1,105,096

 

1,031,337

   Depreciation and amortization

113,638

 

107,436

 

447,765

 

416,608

   Lease and rental expense

25,714

 

24,267

 

103,127

 

97,324

   Electronic health records incentive income

0

 

(5,339)

 

0

 

(5,339)

 

2,304,043

 

2,161,455

 

9,129,687

 

8,484,799

               

Income from operations

338,744

 

314,230

 

1,280,178

 

1,281,411

               

Interest expense, net

36,786

 

32,882

 

145,169

 

125,053

               

Income before income taxes

301,958

 

281,348

 

1,135,009

 

1,156,358

               

Provision for income taxes

76,923

 

102,610

 

363,697

 

409,187

               

Net income

225,035

 

178,738

 

771,312

 

747,171

               

Less:  Net income attributable to

             

noncontrolling interests

5,426

 

4,530

 

19,009

 

44,762

               

Net income attributable to UHS

$219,609

 

$174,208

 

$752,303

 

$702,409

               
               
               
               
               
               

Basic earnings per share attributable to UHS (a)

$2.32

 

$1.80

 

$7.86

 

$7.22

               

Diluted earnings per share attributable to UHS (a)

$2.31

 

$1.78

 

$7.81

 

$7.14

 

 

Universal Health Services, Inc.

Footnotes to Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)

               
 

Three months

 

Twelve months

(a) Earnings per share calculation:

ended December 31,

 

ended December 31,

 

2017

 

2016

 

2017

 

2016

Basic and diluted:

             

Net income attributable to UHS

$219,609

 

$174,208

 

$752,303

 

$702,409

Less: Net income attributable to unvested restricted share grants

(105)

 

(72)

 

(362)

 

(314)

Net income attributable to UHS - basic and diluted

$219,504

 

$174,136

 

$751,941

 

$702,095

               

Weighted average number of common shares - basic

94,530

 

96,998

 

95,652

 

97,208

               

Basic earnings per share attributable to UHS:

$2.32

 

$1.80

 

$7.86

 

$7.22

               

Weighted average number of common shares

94,530

 

96,998

 

95,652

 

97,208

Add: Other share equivalents

379

 

917

 

673

 

1,172

Weighted average number of common shares and equiv. - diluted

94,909

 

97,915

 

96,325

 

98,380

               

Diluted earnings per share attributable to UHS:

$2.31

 

$1.78

 

$7.81

 

$7.14

 

 

 

Universal Health Services, Inc.

Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule")

For the Three Months ended December 31, 2017 and 2016

(in thousands, except per share amounts)

(unaudited)

               
               
               

Calculation of Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")

               
 

Three months ended

 

% Net

 

Three months ended

 

% Net

 

December 31, 2017

 

revenues

 

December 31, 2016

 

revenues

               

Net income attributable to UHS

$219,609

     

$174,208

   

   Depreciation and amortization

113,638

     

107,436

   

   Interest expense, net

36,786

     

32,882

   

   Provision for income taxes

76,923

     

102,610

   

EBITDA

$446,956

 

16.9%

 

$417,136

 

16.8%

EHR-related net income attributable to
noncontrolling interests, pre-tax

(29)

     

(128)

   

Adjusted EBITDA

$446,927

 

16.9%

 

$417,008

 

16.8%

               

Net revenues

$2,642,787

     

$2,475,685

   
               
               
               
               
               

Calculation of Adjusted Net Income Attributable to UHS

               
 

Three months ended

 

Three months ended

 

December 31, 2017

 

December 31, 2016

     

Per

     

Per

 

Amount

 

Diluted Share

 

Amount

 

Diluted Share

               

Net income attributable to UHS

$219,609

 

$2.31

 

$174,208

 

$1.78

Plus/minus after-tax adjustments:

             

Impact of ASU 2016-09

(13,477)

 

(0.14)

 

-

 

-

After-tax impact of EHR-related items

2,255

 

0.03

 

1,770

 

0.02

Impact of TCJA-17-Deferred tax

(30,000)

 

(0.32)

 

-

 

-

Impact of TCJA-17-Repatriation tax

11,250

 

0.12

 

-

 

-

Subtotal

(29,972)

 

(0.31)

 

1,770

 

0.02

Adjusted net income attributable to UHS

$189,637

 

$2.00

 

$175,978

 

$1.80

 

 

 

Universal Health Services, Inc.

Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule")

For the Twelve Months ended December 31, 2017 and 2016

(in thousands, except per share amounts)

(unaudited)

               
               
               

Calculation of Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")

               
 

Twelve months ended

 

% Net

 

Twelve months ended

 

% Net

 

December 31, 2017

 

revenues

 

December 31, 2016

 

revenues

               

Net income attributable to UHS

$752,303

     

$702,409

   

   Depreciation and amortization

447,765

     

416,608

   

   Interest expense, net

145,169

     

125,053

   

   Provision for income taxes

363,697

     

409,187

   

EBITDA

$1,708,934

 

16.4%

 

$1,653,257

 

16.9%

EHR-related net income attributable to
noncontrolling interests, pre-tax

(229)

     

(1,746)

   

Adjusted EBITDA

$1,708,705

 

16.4%

 

$1,651,511

 

16.9%

               

Net revenues

$10,409,865

     

$9,766,210

   
               
               
               
               
               

Calculation of Adjusted Net Income Attributable to UHS

               
 

Twelve months ended

 

Twelve months ended

 

December 31, 2017

 

December 31, 2016

     

Per

     

Per

 

Amount

 

Diluted Share

 

Amount

 

Diluted Share

               

Net income attributable to UHS

$752,303

 

$7.81

 

$702,409

 

$7.14

Plus/minus after-tax adjustments:

             

Impact of ASU 2016-09

(22,096)

 

(0.23)

 

-

 

-

After-tax impact of EHR-related items

14,002

 

0.15

 

17,830

 

0.18

Impact of TCJA-17-Deferred tax

(30,000)

 

(0.32)

 

-

 

-

Impact of TCJA-17-Repatriation tax

11,250

 

0.12

 

-

 

-

Subtotal

(26,844)

 

(0.28)

 

17,830

 

0.18

Adjusted net income attributable to UHS

$725,459

 

$7.53

 

$720,239

 

$7.32

 

 

 

Universal Health Services, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)

               
 

Three months

 

Twelve months

 

ended December 31,

 

ended December 31,

 

2017

 

2016

 

2017

 

2016

               

Net income

$225,035

 

$178,738

 

$771,312

 

$747,171

Other comprehensive income (loss):

             

   Unrealized derivative gains on cash flow hedges

3,132

 

13,082

 

6,679

 

1,438

   Amortization of terminated hedge

0

 

0

 

0

 

(167)

   Unrealized loss on marketable security

(3,814)

 

(1,474)

 

(2,169)

 

(2,229)

   Minimum pension liability

4,070

 

13,356

 

4,070

 

13,356

   Foreign currency translation adjustment

16,746

 

(888)

 

26,678

 

(10,038)

Other comprehensive income before tax

20,134

 

24,076

 

35,258

 

2,360

Income tax expense related to items of other comprehensive income

729

 

9,329

 

2,664

 

4,648

Total other comprehensive income (loss), net of tax

19,405

 

14,747

 

32,594

 

(2,288)

               

Comprehensive income

244,440

 

193,485

 

803,906

 

744,883

Less: Comprehensive income attributable to noncontrolling interests

5,426

 

4,530

 

19,009

 

44,762

Comprehensive income attributable to UHS

$239,014

 

$188,955

 

$784,897

 

$700,121

 

 

 

Universal Health Services, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

             
     

December 31,

   

December 31,

     

2017

   

2016

Assets

           

Current assets:

           

    Cash and cash equivalents

 

$

74,423

 

$

33,747

    Accounts receivable, net

   

1,500,898

   

1,439,553

    Supplies

   

136,177

   

125,365

    Other current assets

   

86,504

   

82,706

          Total current assets

   

1,798,002

   

1,681,371

             

Property and equipment

   

7,921,126

   

7,314,437

Less: accumulated depreciation

   

(3,349,289)

   

(2,983,481)

     

4,571,837

   

4,330,956

             

Other assets:

           

    Goodwill

   

3,825,157

   

3,784,106

    Deferred charges

   

9,787

   

13,520

    Deferred income taxes

   

3,007

   

1,234

    Other

   

554,038

   

506,615

Total Assets

 

$

10,761,828

 

$

10,317,802

             

Liabilities and Stockholders' Equity

           

Current liabilities:

           

    Current maturities of long-term debt

 

$

545,619

 

$

105,895

    Accounts payable and accrued liabilities

   

1,284,081

   

1,209,329

    Federal and state taxes

   

18,334

   

2,149

          Total current liabilities

   

1,848,034

   

1,317,373

             

Other noncurrent liabilities

   

306,304

   

275,167

Long-term debt

   

3,494,390

   

4,030,230

Deferred income taxes

   

54,962

   

88,119

             

Redeemable noncontrolling interest

   

6,702

   

9,319

             

UHS common stockholders' equity

   

4,989,514

   

4,533,220

Noncontrolling interest

   

61,922

   

64,374

          Total equity

   

5,051,436

   

4,597,594

             

Total Liabilities and Stockholders' Equity

 

$

10,761,828

 

$

10,317,802

 

 

 

Universal Health Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Twelve months

 

ended December 31,

 

2017

 

2016

       

Cash Flows from Operating Activities:

     

  Net income

$771,312

 

$747,171

  Adjustments to reconcile net income to net 

     

  cash provided by operating activities:

     

  Depreciation & amortization

447,883

 

416,608

  Stock-based compensation expense

56,738

 

48,109

  Changes in assets & liabilities, net of effects from

     

  acquisitions and dispositions:

     

   Accounts receivable

(24,719)

 

(87,881)

   Accrued interest

705

 

9,766

   Accrued and deferred income taxes 

(6,405)

 

22,068

   Other working capital accounts 

(15,165)

 

74,489

   Other assets and deferred charges

(28,607)

 

(25,671)

   Other 

(42,564)

 

81,139

   Excess income tax benefits related to stock-based compensation

0

 

45,219

   Accrued insurance expense, net of commercial premiums paid

102,595

 

84,638

   Payments made in settlement of self-insurance claims

(79,192)

 

(81,962)

          Net cash provided by operating activities

1,182,581

 

1,333,693

       

Cash Flows from Investing Activities:

     

   Property and equipment additions, net of disposals

(557,506)

 

(519,939)

   Acquisition of property and businesses

(22,878)

 

(613,803)

   Proceeds received from sales of assets and businesses

108

 

0

   Costs incurred for purchase and implementation of information technology application

(29,047)

 

(21,475)

   Increase in capital reserves of commercial insurance subsidiary

(7,100)

 

(32,000)

   Investment in, and advances to,  joint venture

(7,976)

 

0

          Net cash used in investing activities

(624,399)

 

(1,187,217)

       

Cash Flows from Financing Activities:

     

   Reduction of long-term debt

(143,106)

 

(459,183)

   Additional borrowings

41,100

 

1,170,800

   Acquisition of noncontrolling interests in majority owned businesses

0

 

(418,000)

   Financing costs

(76)

 

(12,449)

   Repurchase of common shares

(364,401)

 

(353,380)

   Dividends paid

(38,211)

 

(38,875)

   Issuance of common stock

10,254

 

9,503

   Profit distributions to noncontrolling interests

(24,713)

 

(69,583)

          Net cash used in financing activities

(519,153)

 

(171,167)

       

   Effect of exchange rate changes on cash and cash equivalents

1,647

 

(2,790)

Increase (decrease) in cash and cash equivalents

40,676

 

(27,481)

Cash and cash equivalents, beginning of period

33,747

 

61,228

Cash and cash equivalents, end of period

$74,423

 

$33,747

       

Supplemental Disclosures of Cash Flow Information:

     

  Interest paid

$135,533

 

$107,079

       

  Income taxes paid, net of refunds

$370,855

 

$344,611

       

  Noncash purchases of property and equipment

$82,496

 

$65,702

 

 

 

Universal Health Services, Inc.

Supplemental Statistical Information

(unaudited)

                   
                   
                   
         

 % Change 

 

 % Change 

   
         

Quarter ended

 

12 months ended

   

Same Facility:

       

12/31/2017

 

12/31/2017

   
                   

Acute Care Hospitals

                 

Revenues

       

6.5%

 

4.7%

   

Adjusted Admissions

       

7.3%

 

5.5%

   

Adjusted Patient Days

       

5.2%

 

2.8%

   

Revenue Per Adjusted Admission

     

-0.1%

 

-0.3%

   

Revenue Per Adjusted Patient Day

     

1.9%

 

2.4%

   
                   
                   
                   

Behavioral Health Hospitals

                 

Revenues

       

1.6%

 

1.7%

   

Adjusted Admissions

       

2.5%

 

2.4%

   

Adjusted Patient Days

       

-0.7%

 

0.2%

   

Revenue Per Adjusted Admission

     

-0.3%

 

-0.4%

   

Revenue Per Adjusted Patient Day

     

2.9%

 

1.9%

   
                   
                   
                   
                   

UHS Consolidated

   

Fourth quarter ended

 

Twelve months ended

     

12/31/2017

 

12/31/2016

 

12/31/2017

 

12/31/2016

                   

Revenues

   

$2,642,787

 

$2,475,685

 

$10,409,865

 

$9,766,210

EBITDA (1)

   

$446,956

 

$417,136

 

$1,708,934

 

$1,653,257

EBITDA Margin (1)

   

16.9%

 

16.8%

 

16.4%

 

16.9%

                   
                   

Cash Flow From Operations

   

$304,316

 

$197,181

 

$1,182,581

 

$1,333,693

Days Sales Outstanding

   

52

 

52

 

53

 

53

Capital Expenditures  

   

$138,813

 

$123,776

 

$557,506

 

$519,939

                   

Debt 

           

$4,040,009

 

$4,136,125

UHS' Shareholders Equity

           

$4,989,514

 

$4,533,220

Debt / Total Capitalization

           

44.7%

 

47.7%

Debt / EBITDA  (2)

           

2.36

 

2.50

Debt / Cash From Operations  (2)

         

3.42

 

3.10

                   

(1)  Net of Minority Interest 

                 

(2)  Latest 4 quarters

                 

 

 

 

Universal Health Services, Inc.

Acute Care Hospital Services

For the three and twelve months ended

December 31, 2017 and 2016

(in thousands)

                                 
                                 

Same Facility Basis - Acute Care Hospital Services

                               
                                 
   

Three months ended

 

Three months ended

 

Twelve months ended

 

Twelve months ended

   

December 31, 2017

 

December 31, 2016

 

December 31, 2017

 

December 31, 2016

   

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues 

Net revenues before provision for doubtful accounts

 

$1,551,711

     

$1,424,468

     

$5,983,425

     

$5,649,163

   

Less: Provision for doubtful accounts

 

180,051

     

136,271

     

728,438

     

627,827

   

Net revenues

 

1,371,660

 

100.0%

 

1,288,197

 

100.0%

 

5,254,987

 

100.0%

 

5,021,336

 

100.0%

Operating charges:

                               

Salaries, wages and benefits

 

563,616

 

41.1%

 

535,777

 

41.6%

 

2,187,390

 

41.6%

 

2,083,357

 

41.5%

Other operating expenses

 

300,372

 

21.9%

 

318,555

 

24.7%

 

1,225,494

 

23.3%

 

1,215,144

 

24.2%

Supplies expense

 

232,611

 

17.0%

 

215,141

 

16.7%

 

886,829

 

16.9%

 

836,399

 

16.7%

Depreciation and amortization

 

67,214

 

4.9%

 

62,803

 

4.9%

 

252,365

 

4.8%

 

237,658

 

4.7%

Lease and rental expense

 

14,051

 

1.0%

 

13,093

 

1.0%

 

55,915

 

1.1%

 

52,582

 

1.0%

EHR incentive income

 

0

 

 

0

 

 

0

 

 

0

 

Subtotal-operating expenses

 

1,177,864

 

85.9%

 

1,145,369

 

88.9%

 

4,607,993

 

87.7%

 

4,425,140

 

88.1%

Income from operations

 

193,796

 

14.1%

 

142,828

 

11.1%

 

646,994

 

12.3%

 

596,196

 

11.9%

Interest expense, net

 

610

 

0.0%

 

817

 

0.1%

 

2,683

 

0.1%

 

3,277

 

0.1%

Income before income taxes

 

$193,186

 

14.1%

 

$142,011

 

11.0%

 

$644,311

 

12.3%

 

$592,919

 

11.8%

                                 
                                 
                                 

All Acute Care Hospital Services

                               
                                 
   

Three months ended

 

Three months ended

 

Twelve months ended

 

Twelve months ended

   

December 31, 2017

 

December 31, 2016

 

December 31, 2017

 

December 31, 2016

   

Amount

 

% of Net
Revenues

 

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues

 

Amount

 

% of Net
Revenues 

Net revenues before provision for doubtful accounts

 

$1,594,219

     

$1,454,880

     

$6,240,302

     

$5,740,777

   

Less: Provision for doubtful accounts

 

182,288

     

136,271

     

755,619

     

627,827

   

Net revenues

 

1,411,931

 

100.0%

 

1,318,609

 

100.0%

 

5,484,683

 

100.0%

 

5,112,950

 

100.0%

Operating charges:

                               

Salaries, wages and benefits

 

568,618

 

40.3%

 

537,675

 

40.8%

 

2,241,527

 

40.9%

 

2,086,986

 

40.8%

Other operating expenses

 

332,287

 

23.5%

 

349,449

 

26.5%

 

1,350,741

 

24.6%

 

1,308,293

 

25.6%

Supplies expense

 

234,721

 

16.6%

 

215,176

 

16.3%

 

905,165

 

16.5%

 

836,481

 

16.4%

Depreciation and amortization

 

72,084

 

5.1%

 

71,097

 

5.4%

 

285,501

 

5.2%

 

273,176

 

5.3%

Lease and rental expense

 

14,142

 

1.0%

 

13,094

 

1.0%

 

57,208

 

1.0%

 

52,604

 

1.0%

EHR incentive income

 

0

 

 

(5,339)

 

(0.4)%

 

0

 

 

(5,339)

 

(0.1)%

Subtotal-operating expenses

 

1,221,852

 

86.5%

 

1,181,152

 

89.6%

 

4,840,142

 

88.2%

 

4,552,201

 

89.0%

Income from operations

 

190,079

 

13.5%

 

137,457

 

10.4%

 

644,541

 

11.8%

 

560,749

 

11.0%

Interest expense, net

 

610

 

0.0%

 

817

 

0.1%

 

2,684

 

0.0%

 

3,277

 

0.1%

Income before income taxes

 

$189,469

 

13.4%

 

$136,640

 

10.4%

 

$641,857

 

11.7%

 

$557,472

 

10.9%

                                 
                                 

We believe that providing our results on a "Same Facility" basis (which is a non-GAAP measure), which includes the operating results for facilities and businesses operated in both the current year and prior year periods, is helpful to our investors as a measure of our operating performance. Our Same Facility results also neutralize (if applicable) the impact of the EHR applications, the effect of items that are non-operational in nature including items such as, but not limited to, gains on sales of assets and businesses, impacts of settlements, legal judgments and lawsuits and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods. Our Same Facility basis results exclude from net revenues and other operating expenses, provider tax assessments incurred in each period.However, these provider tax assessments are included in net revenues and other operating expenses as reflected in the table under All Acute Care Hospital Services. The provider tax assessments had no impact on the income before income taxes as reflected on the above tables since the amounts offset between net revenues and other operating expenses. To obtain a complete understanding of our financial performance, the Same Facility results should be examined in connection with our net income as determined in accordance with GAAP and as presented in the condensed consolidated financial statements and notes thereto as contained in our Form 10-K for the year ended December 31, 2017.

                                 

TheAll Acute Care Hospital Servicestable summarizes the results of operations for all our acute care operations during the three and twelve-month periods ended December 31, 2017 and 2016. These amounts include: (i) our acute care results on a same facility basis, as indicated above; (ii) the impact of the implementation of EHR applications at our acute care hospitals; (iii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iv) certain other amounts including the results of facilities acquired or opened during the last twelve months.

 

 

 

Universal Health Services, Inc.

Behavioral Health Services

For the three and twelve months ended

December 31, 2017 and 2016

(in thousands)

                                 
                                 

Same Facility - Behavioral Health Care Services

                               
                                 
   

Three months ended

 

Three months ended

 

Twelve months ended

 

Twelve months ended

   

December 31, 2017

 

December 31, 2016

 

December 31, 2017

 

December 31, 2016

   

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues 

Net revenues before provision for doubtful accounts

 

$1,177,124

     

$1,157,416

     

$4,743,340

     

$4,666,633

   

Less: Provision for doubtful accounts

 

28,304

     

26,451

     

111,277

     

113,455

   

Net revenues

 

1,148,820

 

100.0%

 

1,130,965

 

100.0%

 

4,632,063

 

100.0%

 

4,553,178

 

100.0%

Operating charges:

                               

Salaries, wages and benefits

 

591,423

 

51.5%

 

564,614

 

49.9%

 

2,361,545

 

51.0%

 

2,257,512

 

49.6%

Other operating expenses

 

228,791

 

19.9%

 

225,015

 

19.9%

 

921,991

 

19.9%

 

885,574

 

19.4%

Supplies expense

 

49,005

 

4.3%

 

48,275

 

4.3%

 

195,291

 

4.2%

 

193,901

 

4.3%

Depreciation and amortization

 

35,162

 

3.1%

 

32,725

 

2.9%

 

136,000

 

2.9%

 

131,231

 

2.9%

Lease and rental expense

 

11,271

 

1.0%

 

12,097

 

1.1%

 

44,259

 

1.0%

 

44,975

 

1.0%

Subtotal-operating expenses

 

915,652

 

79.7%

 

882,726

 

78.1%

 

3,659,086

 

79.0%

 

3,513,193

 

77.2%

Income from operations

 

233,168

 

20.3%

 

248,239

 

21.9%

 

972,977

 

21.0%

 

1,039,985

 

22.8%

Interest expense, net

 

416

 

0.0%

 

426

 

0.0%

 

2,006

 

0.0%

 

1,728

 

0.0%

Income before income taxes

 

$232,752

 

20.3%

 

$247,813

 

21.9%

 

$970,971

 

21.0%

 

$1,038,257

 

22.8%

                                 
                                 
                                 

All Behavioral Health Care Services

                               
                                 
   

Three months ended

 

Three months ended

 

Twelve months ended

 

Twelve months ended

   

December 31, 2017

 

December 31, 2016

 

December 31, 2017

 

December 31, 2016

   

Amount

 

% of Net
Revenues

 

Amount

 

% of Net
Revenues 

 

Amount

 

% of Net
Revenues

 

Amount

 

% of Net
Revenues 

Net revenues before provision for doubtful accounts

 

$1,250,298

     

$1,181,804

     

$5,020,177

     

$4,758,761

   

Less: Provision for doubtful accounts

 

28,809

     

26,478

     

113,458

     

113,754

   

Net revenues

 

1,221,489

 

100.0%

 

1,155,326

 

100.0%

 

4,906,719

 

100.0%

 

4,645,007

 

100.0%

Operating charges:

                               

Salaries, wages and benefits

 

627,066

 

51.3%

 

568,745

 

49.2%

 

2,496,236

 

50.9%

 

2,271,967

 

48.9%

Other operating expenses

 

257,378

 

21.1%

 

245,195

 

21.2%

 

1,042,056

 

21.2%

 

965,873

 

20.8%

Supplies expense

 

49,969

 

4.1%

 

48,628

 

4.2%

 

199,936

 

4.1%

 

194,872

 

4.2%

Depreciation and amortization

 

38,984

 

3.2%

 

33,484

 

2.9%

 

152,067

 

3.1%

 

134,487

 

2.9%

Lease and rental expense

 

11,452

 

0.9%

 

12,130

 

1.0%

 

45,445

 

0.9%

 

45,346

 

1.0%

Subtotal-operating expenses

 

984,849

 

80.6%

 

908,182

 

78.6%

 

3,935,740

 

80.2%

 

3,612,545

 

77.8%

Income from operations

 

236,640

 

19.4%

 

247,144

 

21.4%

 

970,979

 

19.8%

 

1,032,462

 

22.2%

Interest expense, net

 

415

 

0.0%

 

426

 

0.0%

 

2,005

 

0.0%

 

1,728

 

0.0%

Income before income taxes

 

$236,225

 

19.3%

 

$246,718

 

21.4%

 

$968,974

 

19.7%

 

$1,030,734

 

22.2%

                                 
                                 

We believe that providing our results on a "Same Facility" basis (which is a non-GAAP measure), which includes the operating results for facilities and businesses operated in both the current year and prior year periods, is helpful to our investors as a measure of our operating performance. Our Same Facility results also neutralize (if applicable), the effect of items that are non-operational in nature including items such as, but not limited to, gains on sales of assets and businesses, impacts of settlements, legal judgments and lawsuits and other amounts that may be reflected in the current or prior year financial statements that relate to prior periods. Our Same Facility basis results exclude from net revenues and other operating expenses, provider tax assessments incurred in each period.However, these provider tax assessments are included in net revenues and other operating expenses as reflected in the table under All Behavioral Health Care Services. The provider tax assessments had no impact on the income before income taxes as reflected on the above tables since the amounts offset between net revenues and other operating expenses. To obtain a complete understanding of our financial performance, the Same Facility results should be examined in connection with our net income as determined in accordance with GAAP and as presented in the condensed consolidated financial statements and notes thereto as contained in our Form 10-K for the year ended December 31, 2017.

                                 

The All Behavioral Health Care Services table summarizes the results of operations for all our behavioral health care facilities during the three and twelve-month periods ended December 31, 2017 and 2016. These amounts include: (i) our behavioral health results on a same facility basis, as indicated above; (ii) the impact of provider tax assessments which increased net revenues and other operating expenses but had no impact on income before income taxes, and; (iii) certain other amounts including the results of facilities acquired or opened during the last twelve months.

 

 

 

Universal Health Services, Inc.

Selected Hospital Statistics

For the three months ended

December 31, 2017 and 2016

                 
                 

AS REPORTED:

               
                 
                 
   

ACUTE

 

BEHAVIORAL HEALTH

   

12/31/17

12/31/16

%  change

 

12/31/17

12/31/16

%  change

                 

Hospitals owned and leased

 

26

26

0.0%

 

300

214

40.2%

Average licensed beds

 

6,132

6,100

0.5%

 

23,225

21,884

6.1%

Average available beds

 

5,960

5,925

0.6%

 

23,140

21,803

6.1%

Patient days

 

330,319

309,916

6.6%

 

1,569,123

1,488,685

5.4%

Average daily census

 

3,590.4

3,368.7

6.6%

 

17,055.7

16,181.4

5.4%

Occupancy-licensed beds

 

58.6%

55.2%

6.1%

 

73.4%

73.9%

-0.6%

Occupancy-available beds

 

60.2%

56.9%

6.0%

 

73.7%

74.2%

-0.7%

Admissions

 

75,795

69,411

9.2%

 

114,049

111,080

2.7%

Length of stay

 

4.4

4.5

-2.4%

 

13.8

13.4

2.7%

                 

Inpatient revenue

 

$5,514,735

$4,746,830

16.2%

 

$2,260,616

$2,030,155

11.4%

Outpatient revenue

 

3,335,708

2,913,066

14.5%

 

253,078

233,645

8.3%

Total patient revenue

 

8,850,443

7,659,896

15.5%

 

2,513,694

2,263,800

11.0%

Other revenue

 

115,512

117,385

-1.6%

 

50,711

53,553

-5.3%

Gross hospital revenue

 

8,965,955

7,777,281

15.3%

 

2,564,405

2,317,353

10.7%

                 

Total deductions

 

7,371,736

6,322,401

16.6%

 

1,314,107

1,135,549

15.7%

                 

Net hospital revenue before 

               

  provision for doubtful accounts

 

1,594,219

1,454,880

9.6%

 

1,250,298

1,181,804

5.8%

                 

Provision for doubtful accounts

 

182,288

136,271

33.8%

 

28,809

26,478

8.8%

                 

Net hospital revenue 

 

$1,411,931

$1,318,609

7.1%

 

$1,221,489

$1,155,326

5.7%

                 
                 

SAME FACILITY: